What is Incorporator: A Guide for Small Business Owners

If you are a small business owner or someone who is interested in starting a business, you have probably come across the term “incorporator.” But what does it mean? In this article, we will explore the definition of an incorporator and their role in the business world.

Definition of Incorporator

An incorporator is an individual or entity responsible for initiating the process of incorporating a business. They are often the first individuals involved in the creation of a corporation and play a crucial role in the legal formation of the company.

Incorporator

2.1 Incorporator’s Responsibilities:

The incorporator assumes several important responsibilities in the process of incorporating a business:

  • Preparing and filing the necessary documents: The incorporator is responsible for preparing and filing the articles of incorporation with the appropriate government agency. These documents outline important details about the company, such as its name, purpose, and registered agent.
  • Choosing the initial board of directors: The incorporator is typically tasked with selecting the initial board of directors for the newly formed corporation. This crucial decision can shape the direction and governance of the company in its early stages.
  • Obtaining necessary licenses and permits: Depending on the nature of the business, the incorporator may need to apply and secure the required licenses and permits for the corporation to operate legally.

2.2 Incorporator’s Legal Obligations:

As the incorporator, there are legal obligations and considerations that must be observed:

  1. Filing requirements: The incorporator must ensure that all necessary documents are filed correctly and within the specified timeframes. Failure to comply with these requirements may result in penalties or delays in the incorporation process.
  2. Fiduciary duties: In some jurisdictions, the incorporator owes fiduciary duties to the corporation until the board of directors is appointed. These duties include acting in the corporation’s best interests, exercising good faith, and avoiding conflicts of interest.
  3. Compliance with laws: The incorporator should be aware of the applicable laws and regulations related to incorporating a business. This includes compliance with tax obligations, employment laws, and industry-specific regulations.

2.3 Importance of an Incorporator:

The role of an incorporator is crucial in the formation of a business entity. Here are a few reasons why an incorporator is important:

  • Legal compliance: An experienced incorporator ensures that all legal requirements are met during the incorporation process, reducing the risk of non-compliance issues or legal challenges down the line.
  • Smooth incorporation: The incorporator guides the small business owner through the incorporation process, ensuring that all necessary steps are taken, documents are prepared, and filings are made accurately and on time.
  • Establishing credibility: The act of incorporating adds credibility and professionalism to a business, increasing its appeal to potential partners, investors, and customers.

2.4 Differences Between Incorporator and Director:

While the incorporator and director may seem similar, they have distinct roles within a corporation:

IncorporatorDirector
Initiates the incorporation processOversees the ongoing operations of the corporation
Typically not involved in day-to-day managementInvolved in the strategic decision-making process
Chooses the initial board of directorsPart of the board of directors, elected by shareholders

2.5 Hiring Professional Help:

Incorporating a business can be a complex process, and it is often advisable for small business owners to seek professional assistance. Hiring a lawyer or a business incorporation service can provide expertise and guidance throughout the incorporation journey.

Understanding the role of an incorporator is essential for small business owners who wish to establish a corporation. The incorporator is a key player in the formation process, ensuring compliance with legal requirements and facilitating a smooth transition to becoming a legally recognized entity. By familiarizing yourself with the responsibilities and importance of an incorporator, you can take informed steps towards establishing a successful business entity.